India's middle class is anticipated to rise by 110 Million households by 2030, fueling enlarged consumption and retail growth. The retail market of India was raised by 60% in 2022, with offline retailers seeing 35% Y-o-Y growth, while highlighting industry’s strength.
With a shift towards online payment mechanisms and greater digitization, medium and small enterprises are growing their businesses, with 1.5-2.5 Million MSMEs (Micro, Small and Medium Enterprises) showing their online presence. India’s appearance as a leader in the Global Retail Innovation Index 2023 shows the country's commitment to serve consumers beyond boundaries and opening up to more trade, predicting a rise of $300 Billion in e-commerce exports by 2030.
With changing lifestyles and increasing income, digital shopping by mass consumers is expected to add 45% to the Gross Merchandise Value (GMV) of e-commerce by 2030. While targeting for a $2 Trillion valuation by 2033 with a growth rate of 9-10%, increasing urbanization, and rapid growth in per capita income to INR 2,08,000 in FY 2022-23, and prepared offline retailers demonstrating a Y-o-Y growth of 35% in 2022, the retail industry is poised for better investment opportunities and parallel growth.
Several government schemes and initiatives such as FDI Policy on Single Brand Retail Trading (SBRT), Food Product Retail Trading (FPRT), Foreign Trade Policy, National Trade Policy and Digital India campaign have supported the growth of the e-commerce ecosystem. The government's latest efforts to improve warehousing, logistics, and transportation networks have also played a significant role in industry expansion. Although, government may change Foreign Direct Investment (FDI) rules in food processing in a proposal to permit E-commerce companies and foreign retailers to sell Made in India consumer products.
Recently, in Feb 2024, Common Service Centers (CSC) and Open Network for Digital Commerce (ONDC) partnered to enlarge e-commerce reach to rural areas in India. This collaboration merge CSC's e-Grameen app with the ONDC network, offering citizens across rural India an access to a vast e-commerce network, while fostering entrepreneurship opportunities and driving the vision of Gram Swaraj.
Robust Demand
The growing purchasing power has led to increasing demand. India's retail industry boasts an impressive market size, while ranking fourth internationally and contributing over 10% to the country's GDP. On the other hand, India's e-commerce industry has achieved around $14 billion in GMV during the festive season of 2024, marking a 12% growth from the preceding year.
Growing Investments
India provides an exceptional advantage for the retail and e-commerce industry due to availability of labor at relatively low costs, wealth of resources, and special investment wages such as tax breaks, and more, foreign corporations usually prefer to invest here. As India’s retail trading segment attracted $4.68 billion FDIs during April 2000 to June 2024. The e-commerce giant Flipkart is poised to raise around $1 billion in a new funding round, with its parent company Walmart expected to contribute $600 million.
Policy Support
The Indian government has implemented some policy measures to improve the business climate, while making it easier for foreign companies to register fully owned subsidiaries in India, and for that the Indian government has implemented a number of regulations, rules, and policies. For instance, 100% FDI allowed for both retail and e-commerce industry under the automatic route. The liberalisation of FDI is estimated to give a boost to make in India and ease of doing business.
Opportunities
Majority of global investors are investing in the retail industry either by buying a stake in existing assets or with Greenfield development platforms. India's e-commerce platforms also achieved an important milestone, hitting a GMV of $60 billion in fiscal year 2023, while marking a 22% rise from the preceding year.
